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Salary Dividend Consideration

There are a number of considerations that can affect whether an owner-manager chooses to take out salary income versus dividend income. Some of these considerations include:

  • Paying a salary helps eliminate AMT whereas eligible dividends may cause AMT to apply;
  • Dividends reduce CNIL balances;
  • Dividends result in both corporate and personal installments;
  • Dividends may result in a dividend refund-if there is RDTOH; and
  • The existence of a GRIP balance allows eligible dividends to be paid.

Every person’s and corporations tax circumstances is unique and changes over time. Determining what the most tax efficient method of remunerating owner-managers is one that relies on current information about both the payor and the payee.

pro-tip

Pro Tip

ACCESSING THE SMALL BUSINESS DEDUCTION IN YOUR BUSINESS

The Small Business Deduction gives businesses a tax deduction on the first $500,000 of income. This saves an eligible corporation around up to $50,000 in income taxes. There are a number of conditions that have to be met to be eligible for this deduction.

Testimonial

Sam Faris reduced the significant unreported income based on net worth audit to be nil. Sam’s approach in fighting these types of complex audits is unique and sophisticated. He found countless mistakes made by the auditor which were rectified when Sam appealed the audit decision. Instead of owing significant amount of taxes, Sam reduced it to zero. I highly recommend to hire Sam for this type of audits and any CRA problem.”

E.M., Ottawa
pro-tip

Pro Tip

ACCESSING THE SMALL BUSINESS DEDUCTION IN YOUR BUSINESS

The Small Business Deduction gives businesses a tax deduction on the first $500,000 of income. This saves an eligible corporation around up to $50,000 in income taxes. There are a number of conditions that have to be met to be eligible for this deduction.